Hiking the repo rate implies the taka will be costlier, which will subsequently help contain inflation.
The bank’s notice announcing the hike in the policy rate came hours after it depreciated the exchange rate of the taka by 1.25 per cent to Tk 89 per US dollar, according to Bangladeshi media reports. It stood at Tk 85.80 per dollar on December 30 and Tk 84.80 on May 29 last year.
Inflation in the country shot up to 6.29 per cent in April, the highest in 18 months.
The bank’s chief economist Mohammad Habibur Rahman said the hike in the policy rate would help rein in the demand for local and foreign goods, according to Bangladeshi media reports.
"We have given a signal to the market that the central bank has started implementing its tools to fight inflation and bring back stability to the foreign exchange market,” he was quoted as saying.
ALCHEMPro News Desk (DS)
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